Clark Howard On Economy: U.S. Doesn't Have Its Act Together

Updated: Aug 8, 2011 - 3:34 PM

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Clark Howard On Economy: U.S. Doesn't Have Its Act Together

WASHINGTON,None - President Barack Obama on Monday essentially dismissed the first-ever downgrade of the U.S. credit rating, trying to reassure investors and the public that the nation's leaders need only show more "common sense and compromise" to tame a staggering accumulation of debt.

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Seeking to demonstrate command in a volatile economic climate, Obama said he hoped the decision by Standard & Poor's would at least give Congress a renewed sense of urgency to tackle debt problems. He said that must be done mainly by taking on the politically difficult issues of reforming taxes and entitlement programs in the coming months.

In his first public comments on the credit downgrade, which S&P announced late Friday, Obama said Washington had the power to fix its own political dysfunction.

"Markets will rise and fall," he said. "But this is the United States of America. No matter what some agency may say, we've always been and always will be a triple-A country."

"This is really just a shot across the bow. It's saying the United States doesn't have its act together. If you think about it for generations, we've been the rock of Gibraltar for the world, and now suddenly, that rock is shifting. It almost feels like a slow motion earthquake,” said Howard.

Howard said the debt ceiling debate was very damaging, psychologically.

"As the Congress was going through the debate about the debt ceiling, people instantly started reigning in their spending, which does slow the economy down. As we look forward, the reality is, a lot of people are going to be very upset. If they have 401(k) plans, and they look at their statements and they see the numbers shrinking in their plan instead of growing, it feels like we just saw this movie a couple years ago, cause we did," said Howard.

S&P officials dropped the government's rating to AA+ from the top rating, AAA, based on a lack of confidence that Congress and the president will be able to shake their political gridlock and make more serious reductions in the long-term debt. The agency was dissatisfied with the deal lawmakers reached last week just in time to prevent a government default.

Obama said most of the world's investors agree that the United States remains a wise place to put their money. Still, stocks sunk in trading Monday as U.S. investors joined a global sell-off after the downgrade.